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TMI Blog2016 (5) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... 14A of the Act read with rule 8D of the Rules, being expenditure incurred in relation to exempted income, without appreciating the facts that the shares were held by the assessee as stock in trade, therefore, the disallowance was wrongly made. Further, it was not appreciated that there were no direct or indirect expenses, incurred by the assessee, for earning the dividend income of Rs. 2,64,733/- as all expenses debited to profit & loss account were in relation to the business carried out by the assessee, therefore, the disallowance of Rs. 23,03,775/-, u/s 14A was on notional basis, therefore, be deleted. 2. During hearing, the ld. counsel for the assessee, Shri K. Shivaram, relied upon the decision in the case of M/s Daga Global Chemical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned is out of own funds and hence disallowance u/s14A r.w. Rule8D may be deleted. 4. The learned CIT(A) erred in holding that A.O. duly recorded satisfaction before invoking section 14A r.w. Rule 8D without appreciating the fact that assessee had shown bifurcation of Financial expenses to A.O. to show that interest expense was not incurred for investment in shares or for earning exempt dividend income and A.O. did not reject the same and still A.O. applied Rule 8D in an automatic fashion and hence, no satisfaction was recorded by A.O. as required u/s 14A before invoking Rule 8D. 5. The learned CIT(A) failed to appreciate that disallowance u/s 14A read with Rule 8D cannot exceed exempt income. 6. Without prejudice to above, dividen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment invoke section 14A r.w. Rule 8D by contending that assessee claimed various expenses which are related to exempt income in its profit & loss account and disallowed Rs. 14,58,412/-. On appeal, before the ld. Commissioner of Income tax (Appeals) broadly the stand taken in the assessment order was affirmed against which the assessee is in further appeal before this Tribunal. The totality of facts clearly indicates, as claimed by the assessee that no borrowed funds were utilized for earning the exempt income by the assessee and further the dividend were directly credited in the bank account of the assessee and no expenditure was claimed. What it may be, we find that the assessee only received Rs. 1,82,362/- as dividend income, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation on V-SAT Line/Infrastructure at the rate of 15% instead of 60%, claimed by the assessee is concerned. It was explained by the ld. counsel that V-SAT is nothing but part of computer system, therefore, the claim of the assessee may be allowed. The ld. counsel placed reliance upon the decision in ACIT vs National Stock Exchange of India Ltd. (2011) 133 ITD 27 (Mum. Trib.), wherein, it was held that V-SAT network for the purposes of enabling screen based trading by the members is entitled to full depreciation. Reliance was also placed in ITO vs Omni Global Information Technologies India Pvt. Ltd. (2011) 131 ITD 280 (Del. Trib.), wherein, it was held that computer peripherals such as printers, scanners, servers, UPS, etc. are integr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereas, the assessee has claimed that computer does not function in isolation or stand alone, the other items such as printer and UPS etc. are necessary for the functioning of the computer and, therefore, these items are also integral part of the computer and accordingly depreciation is to be allowed on these items at the same rate at which it is allowed to computers. The assessee's view finds support from various decisions of Hon'ble High Courts and Hon'ble ITAT as relied by the assessee and as reproduced above. Hon'ble Delhi High Court has held that UPS to be eligible for depreciation @ 60% in the case of Orient Ceramic and Industries Ltd. (supra). Hon'ble ITAT has found printers, scanners and servers as integral part of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax (Appeals). Finally, the appeal of the Revenue is dismissed." In the aforesaid order, the Tribunal placed reliance upon various decisions and concluded that higher rate of depreciation is allowable to the assessee. Identical ratio was laid down in the cases relied upon by the assessee before us. Considering the totality of facts, we are of the view, higher rate of depreciation, is allowable to the assessee. This ground of the assessee is therefore allowed. 4. So far as, the appeal for A.Y. 2009-10 (ITA No.5871/Mum/2011) is concerned, identical ground has been raised, therefore, our above conclusion will be applicable to this appeal also. Finally, both the appeals are disposed of in terms indicated hereinabove. This orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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